Case Number: 64

1. Abstract

Oil has been an important part of the Nigerian economy since vast
reserves of petroleum were discovered in Nigeria in the 1950s. For
example, revenues from oil have increased from 219 million Naira in
1970 to 10.6 billion Naira in 1979. Currently, Nigeria earns over
95 percent of its foreign exchange from the sale of oil on the
global market. Foreign oil companies have dominated oil
exploration, drilling, and shipping in Nigeria. For example, Shell
Oil controls approximately 60 percent of the domestic oil market in
Nigeria. Shell operates many of its oil facilities in the oil-rich
Delta region of Nigeria. The Ogonis, an ethnic group that
predominate in the Delta region, have protested that Shell's oil
production has not only devastated the local environment, but has
destroyed the economic viability of the region for local farmers
and producers. The Nigerian Federal Government, on the other hand,
has been charged with failing to enact and enforce environmental
protection against oil damage by Shell and other oil companies.
Furthermore, many Ogonis have been harassed and even killed by the
Federal government for organizing protests and threatening sabotage
of oil facilities.

2. Description

Oil production in Nigeria has had severe environmental and human
consequences for the indigenous peoples who inhabit the areas
surrounding oil extraction. Nigeria's export of 12 million barrels
of oil a day comes from 12% of the country's land, and
indigenous minority communities in these areas receive no economic
benefits. Development strategies focused on increasing foreign
investments in Nigeria's oil industry to boost exports have not
caused overall development. The revenue gained has helped to
benefit foreign nations and Nigerian government elites more than
native populations. Indigenous groups are actually further
impoverished due to environmental degradation from oil production
and the lack of adequate regulations on multinational companies, as
they become more vulnerable to food shortages, health hazards, loss
of land, pollution, forced migration and unemployment. These
affected groups include Abribas, Andonis, Edos, Effiks, Gokanas,
Ibibios, Ejaws, Ika-Ibos, Ikwernes Isekiris, Isokus, Kalaboris,
Urhobos and Ogonis, who together comprise one fourth of Nigeria's
population (approximately 30,000 million people). The welfare
of these various groups has been completely neglected by the ruling
military regime and the multi-national companies who operate joint
ventures in the exploration of Nigeria's resources. Given that 87%
of the Nigerian total government revenue comes from oil
production, and that oil companies sole purpose is to maximize
profits, both institutions have an interest in maintaining
production at the status quo.

The Ogoni have sought more political autonomy and compensation for
environmental damage to their land by oil companies since 1990.
Their campaign, against Shell Oil Company which has extracted an
estimated US $30 billion of oil from Ogoniland since 1958, has been
met with force and extreme violence by Nigeria's military
government. Protesters have been jailed, killed and silenced for
demonstrating against the multi-national company. For example, Ken
Saro-Wiwa, leader of the Movement for the Survival of the Ogoni
People, has been jailed and accused of inciting members of the
group to kill four Ogoni elders. However, "his more likely
"crime" is his effort to organize the Ogoni ethnic minority to stop
destruction of their homeland caused by operations of Shell and
Chevron, the multinational oil companies, and seek compensation for
his people's lost farmland and fisheries."

Military coups have become something of a tradition in Nigerian
politics, dating from the military seizure of power which followed
the federal elections in 1964 in an effort to forge national unity.
A succession of military regimes ensued (interrupted only briefly
by civil rule), each replaced for its failure to effect national
unity, policy reform, and effective economic policy. In 1993,
Nigeria's democratically elected president was ousted out of office
by the military government of General Abacha, who then became
president. As a result oil production workers went on strike
demanding that the fairly elected president, Moshood Abiola, be
allowed to return to power. The oil workers joined pro-democracy
activists in striking against the military rulers who were widely
viewed as having totally mismanaged Nigeria's economy. The Unions
, eager to get the oil industry out of corrupt hands, forced the
state owned Nigerian National Petroleum Company to become largely
in debt, causing Shell Oil Company a loss of one third of its usual
production of 920,000 barrels per day. Companies oil production
in Nigeria was being hampered by the debt burden, in turn hurting
Nigeria's foreign exchange earnings from oil exports. The
strikes were met with brute force by the Abacha regime which rules
the country with an iron fist, often committing human rights abuses
and otherwise suppressing political dissent. Abacha believes
that the task of this military regime is to "bear the burden of
managing the delicate transition from military to civil rule."
However, Abacha is intent on bearing this burden for as long as he
can.

Community Attempts at Collective Action

In the context of this wider political crisis, the government
feared that the Ogoni's protests against environmental degradation
would have a snowballing affect and that other ethnic groups would
begin to fight with each other. In an effort to suppress this, the
regime uses brute force and systemic violence claiming that they
are actually helping to curtail the fighting between ethnic groups.
The story of the Ogoni people has received world wide attention as
a result of the arrest of Saro-wiwa, which has been exposed by
human rights and environmental groups. Amnesty International and
Greenpeace have campaigned against his arrest and have accused
Nigeria's military government of looting, rape and executions of
oil protesters. "The Nigerian security forces have been
responsible for the extrajudicial executions of Rivers State
villagers protesting against environmental damage and inadequate
compensation for destruction of land and crops by oil
companies." In a Greenpeace study on the Ogoni and Shell oil
company, protests met with state violence in eight communities
along the Niger Delta are documented. For example, a community
in southern Lijaw sealed Shell's Dieby Creek Flowstation to protest
against non-payment by Shell for an oil spill which occurred in
1992. The Ogbia community produced a Charter of Demands and
established an organization to demand compensation for damages
caused by Shell. In another instance, in 1990, about 80 people in
Umuechen by the Mobile Police Force killed and 495 homes were
destroyed during a peaceful protest against Shell, after the
company requested the assistance of the police.

Environmental Damage

The social and environmental costs of oil production have been
extensive. They include destruction of wildlife and biodiversity,
loss of fertile soil, pollution of air and drinking water,
degradation of farmland and damage to aquatic ecosystems, all of
which have caused serious health problems for the inhabitants of
areas surrounding oil production. Pollution is caused by gas
flaring, above ground pipeline leakage, oil waste dumping and oil
spills. Approximately 75% of gas produced is flared annually
causing considerable ecological and physical damage to other
resources such as land/soil, water and vegetation. Gas flares,
which are often times situated close to villages, produce "soot
which is deposited on building roofs of neighboring villages.
Whenever it rains, the soot is washed off and the black ink-like
water running from the roofs is believed to contain chemicals which
adversely effect the fertility of the soil." Without fertile
soil, indigenous groups lose their mode of survival and are faced
with the crisis of food shortages.

Gas pipelines have also caused irreparable damage to lands once
used for agricultural purposes. These pipes should be buried to
reduce risk of fracture and spillage. However, they are often laid
above ground and run directly through villages, where oil leaks
have rendered the land economically useless. An account of
Shell Oil Company's record in the Ogoni region uncovers a "ravaged
environment ..(in which) oil pulses out of burst pipes and slicks
dead vegetation." Although in its operation in other countries
Shell ensures that it does not degrade the environment, it does not
take such precautions in Nigeria. For example, "for Shell's
pipeline from Stanlow in Cheshire to Mossmoran in Scottland, 17
different environmental surveys were commissioned before a single
turf was cut... A detailed Environmental Assessment Impact covered
every measure of the (pipeline) route.. Elaborate measures were
taken to avoid lasting disfiguring and the route was diverted in
several palaces to accommodate environmental concerns..The Ogoni
have never seen, let alone been consulted over, an environmental
impact assessment."

Oil spills and the dumping oil into waterways has been extensive,
often poisoning drinking water and destroying vegetation. These
incidents have become common occupance due to the lack of laws and
enforcement measures within the existing political regime. Between
1970 and 1982, 1,581 incidents of oil spillage were documented in
Nigeria. In addition, "according to an independent record of
Shell's spills from 1982 to 1992, 1,626,000 gallons were spilt from
the company's Nigerian operations in 27 sperate incidents. Of the
number of spills recorded from Shell - a company which operates in
more than 100 countries - 40% were in Nigeria."

Environmental regulations which are common practice in developed
nations are often not followed due to their lack of power, wealth
and equity of the affected communities. As a result, oil companies
often evacuate inhabitants from their homelands, further
marginalizing them. The system of oil production in Nigeria
clearly is heavily skewed in favor of the multi-nationals and
government elites who are the direct recipients of oil production
revenue.

The oil industry in Nigeria has had a number of environmental and
socio-economic effects both in the regions where oil drilling and
shipping primarily take place, and in the larger country itself.
The current crisis is largely concentrated the southwestern oil
producing areas of Rivers, Cross River, and Delta. These areas of
the country have been severely damaged by environmental pollution
from oil spills, dumping of waste products, burning of excess
gases, pipe-line leaks, oil well blowouts, and gas-flaring
operations. One particular ethnic group in Nigeria, the Ogonis,
have organized and protested against both the Nigerian federal
government and Shell Oil, as the major oil producer in the region.
The Ogonis have charged that Shell Oil has consistently damaged the
local environment by: operating a number of off-shore rigs and oil
port facilities which have seriously damaged "the tropical rain
forest in the northern reaches of the Delta and mangrove vegetation
to the south" (Hutchful, 1985). These areas are vital to the local
fishing industry and other local industries. As well, mangrove
wood which is found in this area is used in construction, and as
firewood and charcoal (see Mangrove Case).

Shell is also being accused of engaging in "widespread ecological
disturbances, including explosions from seismic surveys, pollution
from pipe-line leaks, blowouts, drilling fluids and refinery
effluents, and land alienation and disruption of the natural
terrain from construction of industry infrastructure and
installations" (Ibid). For example, oil spill contamination of the
top soil has rendered the soil in the surrounding areas "unsuitable
for plant growth by reducing the availability of nutrients or by
increasing toxic contents in the soil" (Ibid). Gas flaring, on the
other hand, "has been associated with reduced crop yield and plant
growth on nearby farms, and disruption of wildlife in the immediate
vicinity" (Ibid). Shell and other oil companies have developed an
easy and inexpensive way to deal with by-products from oil
drilling: "indiscriminate dumping" (Ibid).

The Ogonis have been critical of the Nigerian Federal government's
role in oil-exploration and drilling activities. For example, the
Federal government is responsible for issuing oil mining and
exploration leases; the government has issued such leases for a
large part of the land and offshore areas of Rivers State. The
government has done this as the sole administrator of oil licensing
through the Nigerian National Petroleum Corporation (NNPC) with no
consultation with local government groups. The Federal government
has also been criticized for allowing the oil companies to dump
wastes in a manner that would be illegal in the United States. For
example, "U.S. environmental regulations completely prohibit the
discharge of produced water or drilling muds from onshore
facilities into surface-water bodies; produced water has to be
reinjected for recovery or injected into disposal wells, while
drilling muds are to be landfilled" (Nwankwo and Irrechukwu, 1981).
However, in Nigeria, oil companies often dispose of wastes from oil
drilling directly into fresh-water bodies, or do not follow proper
pollution-reducing techniques (see Nigeria case).

Many Ogoni leaders have pointed to the nearly complete devastation
of the local economy due to socio-economic and environmental
disturbances from the oil industry. Although Shell earns a
considerable deal of money from its drilling in the Rivers region,
it has done little to nothing to reinvest a portion of its profits
back into the local communities where drilling takes place. For
example, in the Rivers region, "there is an almost total absence of
schools, good drinking water, electricity, medical care, and roads
in many peasant communities" (Hutchful, 1985). Communication and
transportation facilities for local villagers are seriously
limited. The Nigerian federal government is being accused of
diverting profits away from the oil producing regions to other
parts of the country.

Other critics charge that industry wastes from the oil industry
could be used to address, in part, infrastructural deficiencies in
the local communities. For example, the disposal of gas from
flaring "could constitute the basis for generating power for urban
and rural electrification" (Ibid). Other industry wastes "could
form the feedstock for the petrochemical industry, such as
plastics, synthetic fibers, detergents and solvents" (Ibid).
However, Shell and the other oil companies operating in Nigeria
"consider it cheaper to burn away the gases that could have been
used to give electric power and light to these villages" (Ibid).

The oil companies have also introduced major distortions into the
social and economic fabric of the local societies. Apart from the
destruction of local economic activities, Shell and other oil
companies have perpetuated "regional and class inequalities" by
creating "oil colonies" in local areas where oil executives live
quite lavishly in comparison to the impoverished conditions of the
local communities (Ibid). Because the oil industry requires
highly-skilled workers, local villagers are either forced to
migrate to the urban centers after being economically displaced, or
to become low-skilled workers dependent on the oil company. These
structural changes in the economic life of the local communities
has often "generated bitter conflict as the issue of employment and
participation in the oil industry" has divided different segments
of the communities, often along ethnic lines (Ibid). Other
structural effects of the oil industry are "rural depopulation,
disintegration of the peasantry, and urban marginalization" (Ibid).

The crisis over environmental pollution and economic
marginalization from the oil industry reached a peak in January
1993 when 300,000 Ogoni protested against Shell Oil. This
organized protest was followed by repeated harassment, arrests, and
killing of Ogonis by Federal government troops. Developments in
the Ogoni region have been documented by the Office of the General
Secretary, Unrepresented Nations and Peoples Organization (UNPO)
from January 1993 through April 1994. A timeline of events in the
conflict follows (see Table 1).

Table One

A Timeline of the Ogoni Conflict

1993

1994

January 4: 300,000 Ogoni protest against Shell Oil activities and
the environmental destruction of Ogoni land.

January 2: Mr. Saro-Wiwa is placed under house arrest.

February 15-16: Shell International advisors meet with the Shell
Petroleum Development Company (SPDC) in London and the Hague to
consider strategies for countering the "possibility that
internationally organized protest could develop" over Shell's
activities in Ogoni.

January 4: Dr. Owen Wiwa and Mr. Ledum are released and Mr. Saro-
Wiwa's house arrest is lifted.

April 18: Ken Saro-Wiwa, chairman of the resistance group
"Movement for the Survival of the Ogoni People (MOSOP)," is held by
the Nigerian State Security Service at Port Harcourt Airport for 16
hours without charges, is released, but then arrested 5 days later.

January 11: A seven member Commission of Inquiry is installed by
the Rivers State government to investigate Ogoni-Okirika clashes,
and starts public sittings in Port Harcourt.

April 30: Construction work on Shell's Rumuekpe-Bomu Pipeline
destroys freshly planted Ogoni farmland sparking a peaceful
demonstration of approximately 10,000 Ogoni villagers. Nigerian
Federal government soldiers open fire on the crowd of
demonstrators, wounding at least 10.

January 20: A three-member ministerial team starts a two-day tour
of Rivers State to investigate the hostilities between the
communities there, as part of a general inquiry of community
clashes. The Nigerian government is especially worried about
troubles in oil producing areas.

May 1: Mass demonstrations along Bori Road against the pipeline
construction continue. Shell decides to withdraw American workers
and equipment.

January 21: A $500 million contract is signed in Port Harcourt
between Shell Nigeria and ABB Global Engineering UK, allowing the
latter to collect gas from 10 flow stations in Rivers State.

May 3: Agbarator Otu is shot and killed by members of the Nigerian
military while protesting work on the pipeline at Nonwa.

January 24: The three major oil companies in Port Harcourt
estimate to have lost over $200 million during 1993, due to
'unfavorable conditions in their areas of operation,' and call for
urgent measures to combat the situation.

May 16: Mr. Saro-Wiwa has his passport seized while trying to
leave for London.

Early April: A small conflict between Ogoni and Okoloma leads to
serious clashes; Lt. Col. Komo is reported to have said that
soldiers have been directed to deal with aggressive communities,
and if necessary shoot trouble makers. Fifteen Ogoni people are
arrested without being charged, including Dr. Owen Wiwa.

May 19: Amnesty International issues an Urgent Action concerning
the extra-judicial killing of Mr. Otu and the Nigerian government's
use of force against peaceful Ogoni protests.

May 24: Mr. Saro-Wiwa begins a European tour and succeeds in
drawing attention to the struggle of the Ogoni people.

June 12: Presidential elections are boycotted by the Ogoni. A
ruptured pipeline begins to spray oil in Bunu Tai, Ogoni land.
Forty days later, the flow is yet to be stopped. Mr. Saro-Wiwa is
prevented from travelling to the UN conference in Vienna by
Nigerian SSS, and his passport is seized.

June 21: Mr. Saro-Wiwa and other MOSOP officials are arrested.

June 22: Ogoni people march in Bori, in protest against MOSOP
arrests. In reaction, Federal government soldiers are moved from
Port Harcourt and stationed in Bori. Indiscriminate beatings and
arrests of Ogoni people by 'heavy[ily] armed and unfriendly
Nigerian soldiers and police' are frequent.

July 9: At least 60 Ogoni people are killed by Andoni when
arriving back from the Cameroon Republic by boat. This 'incident'
marks the beginning of Ogoni-Andoni violence. Mr. Saro-Wiwa is
moved to a hospital and later released on bail, but charges still
stand.

August 5: Kaa is the first village attacked in the Andoni-Ogoni
conflict, resulting in 33 deaths and 8,000 refugees. Over the
coming months, similar incidents occur in over 20 other villages.
MOSOP accuses Shell of being behind the Andoni-Ogoni violence.

August 31: MOSOP leaders are summoned to Abuja for a meeting with
the Interim government, installed by former head of state Babangida
after the annulment of the June 12 election results. This is the
first time that the Nigerian government officially discussed the
situation in Ogoniland with MOSOP.

Early September: Mr. Saro-Wiwa, Senator Birabi, and
representatives of the Rivers State Security Council visit the
destroyed village of Kaa and urge Governor Ada George to take
measures to curb Andoni-Ogoni violence. Meetings are arranged
between Andoni and Ogoni leaders and government representatives.
This leads to the creation of a Peace Committee, headed by
Professor Claude Ake.

September 15: General Sani Abacha promises Mr. Saro-Wiwa that
Federal troops will be sent to Ogoniland to help curb Andoni-Ogoni
violence.

October 6: A Peace Agreement is signed concerning the Ogoni-Andoni
troubles, but without the signature of Mr. Saro-Wiwa, or the
'consultation of the communities involved.'

October 17: An oil spill at Korokoro oil fields in Ogoni, operated
by Shell. Baritonle Kpormon is shot dead at a checkpoint in Bori
by a Federal soldier who has been sent to ensure peace at the
Ogoni-Andoni border; however Bori is not at the border. A MOSOP
Steering Committee meeting accepts the Peace Agreement but for two
paragraphs, and calls for a Judicial Commission of Inquiry to be
installed by the Federal government.

October 19: Professor Ake, chairman of the Peace Conference, send
a letter to Governor Ada George, stating that he does not agree
with the Peace Agreement. According to him, it was drafted in
haste and without proper consultation of the communities involved.

October 23: Two fire trucks from SPDC are seized at Korokoro by
local inhabitants.

October 25: Three Ogoni men are shot at Korokoro oil fields by
Federal government soldiers accompanying Shell workers who went
back to retrieve the fire trucks. One man dies (Uebari Nna), and
two are wounded (Pal Sunday and Mboo Ndike).

November 17: The interim government resigns. General Abacha
becomes the new Nigerian head of state.

December 13: Governor Ada George is replaced by Lt. Col. Dauda
Komo. Violent clashes between Ogoni and Okirika over crowded land
at waterfronts, Port Harcourt. Over 90 people are reported dead,
many more wounded.

December 28: Probably to prevent the start of the Ogoni Week,
MOSOP leaders Dr. Owen Wiwa and Ledum Mitee, a lawyer, are arrested
without being charged. The Ogoni Assembly is dispersed by Nigerian
soldiers. Lt. Col. Komo states that Ogoni Week was aborted because
MOSOP didn't apply for a permit.

Since this report was compiled, Mr. Ken Saro-Wiwa, along with eight
other MOSOP members, were arrested and charged with the murders of
four traditional chiefs belonging to a pro-government group in the
Ogoni region. The murders occurred during a bloody clash in May
1994 between Ogoni activists and Federal government soldiers. On
October 31, 1995, a federal military tribunal convicted Ken Saro-
Wiwa and the eight others of murder and sentenced them to death.
On November 10, 1995 Ken Saro-Wiwa, Barinem Kiobel, John Kounien,
Baribor Bera, Saturday Dobee, Felix Nwate, Nordu Eawo, Paul Levura,
and Daniel Bgokoo were hanged in Port Harcourt by the Nigerian
federal government. Reactions by the international community were
swift and included the following (see Table 2).

Table 2

International Reaction to Ogoni Conflict

Protest marches at Nigerian embassies and Shell offices all
over the world.

Suspension of Nigeria from the Commonwealth of Britain (a
group comprising of Britain and its former colonies).

The withdrawal of ambassadors by several countries.

Calls for a multilateral oil embargo and other sanctions by world leaders.

Plans for a United Nations General Assembly resolution condemning the executions.

Protest actions by human rights groups such as Amnesty International and environmental
groups such as Greepeace.

Calls by the European Union to impose economic sanctions.

Imposition of a ban on arms sales to Nigeria by a number of countries.

Protests in Nigeria by thousands of students and other individuals.

Under extreme pressure, the International Finance Corporation
cancels a proposed $100 million loan and $80 million equity deal to
Nigeria LNG, a company owned by the Nigerian government and the top
oil producers in Nigeria (Shell, Elf, and Agip), to produce a gas
plant and pipeline in the Niger delta.

Royal Dutch Shell, on the other hand, announced plans on November
16, 1995, just six days after the hangings, that they intend to
proceed with the $5 billion natural gas plant in Nigeria, despite
numerous protests by world leaders, including South Africa's Nelson
Mandela. In mid-November 1995, Shell reiterated its belief that
sanctions would do more to hurt ordinary Nigerians and that the
country will benefit from the natural gas plant. Meanwhile, the
Nigerian government has defrayed all criticism by stating that the
executions were in the purview of the country's domestic judicial
system, and therefore not in a position to be judged by the
international community.

3. Duration: 1992 - now

4. Location

Continent: Africa

Region: West Africa

Country: Nigeria

5. Actors: Nigeria

6. Type of Environmental Problem: Pollution Land

The environmental problems in Nigeria surrounding the extraction of
oil are both a source and sink problem. Although Nigeria has a
heavy volume of oil reserve, there will eventually be a limit to
amount of oil that can be produced. The problems of pollution that
oil extraction causes is extensive. Pollution for oil production
causes soil erosion, ground water and marine area contamination,
air pollution and severe health problems for the indigenous
communities surrounding oil production.

7. Type of Habitat: Tropical

The Ogoni have a long history of preserving their environment,
which they regard as sacred: rivers and streams provide water for
bathing and fish for food, making their environment intricately
connected with communities way of life. The Ogoni, whose
population of 500,000 occupies 404 miles of Nigerian land,y once
made a living farming and fishing. For over 30 years Shell and
Chevron financed drilling on Ogoni land has increasingly pushed
them into the forests and mangrove swamps to survive. "Those who
remain in the townships and villages are subjected to displacement,
expropriation of their property, violence and rape. The Ogoni have
received virtually none of the $30 billion from oil pumped out of
their lands, and they have been actively demonstrating against
such injustices.

8. Act and Harm Sites: Nigeria and Nigeria

9. Type of Conflict: Civil

10. Level of Conflict: Low

11. Fatality Level of Dispute: 3

12. Environment-Conflict Link and Dynamics: Direct

Causal Diagram

13. Level of Strategic Interest: Substate

It is estimated that Nigeria earns over 90 percent of its foreign
exchange and over 80 percent of government revenues from the
petroleum industry. Nigeria produces approximately 1.9 million
barrels of oil per day (b/d), has a refining capacity of 433,250
barrels per calendar day (b/cd), and has 17.9 billion barrels (bbl)
in reserves. Foreign firms own up to 40 percent of the petroleum
agreements in Nigeria. AGIP, Texaco, Chevron, Mobil, and Shell
operated the majority of oil fields in Nigeria, with Shell
controlling over 50 percent of the domestic market. Nigeria has
earned a high of $30.85 per barrel in 1983 to a low of $15.88 in
1988. Today, Nigeria earns approximately $20.00 per barrel. The
oil shocks in the 1970s, and the resultant crash of global oil
prices, caused Nigerian oil revenues to drop from $22.4 billion in
1980 to $9.6 billion in 1983. Because of the role of the foreign
oil companies in the Nigerian oil industry, there are a large
number of foreign workers in the petroleum sector. Employment in
the sector is typically tied to high-skill workers with technical
Knowledge. The number of local residents who are employed in the
petroleum industry is limited when compared to other sectors of the
economy (e.g., agriculture). Although revenues from oil have
decreased, Nigeria still earns the majority of its foreign exchange
from the sale of oil, thus its importance to the national economy
cannot be stressed enough.

The oil industry employs only 5% of the labor force (as opposed to
70% which agriculture once employed before the country become a
single commodity export economy with oil production).

Both Shell Oil and the other foreign oil companies operating in
Nigeria have argued to the Nigerian Federal government that any
attempt at regulating the petroleum industry will have a
detrimental impact both on company profits, but also on national
government revenues and local employment. Shell has argued that it
is in the national interest of Nigeria for the government to
support efforts at expanding current drilling operations and
promoting exploration and establishment of new oil-wells which will
contribute to the economic viability of Nigeria in the competitive
global oil market. Because the Nigerian government receives the
vast majority of its foreign exchange earnings from the sale of
oil, any restrictions on the oil producers or explorers could have
a negative impact on Nigeria's economic earnings. For example,
even a slight reduction in current production levels could have a
large impact on the economy.